Warren joins McCain to push new Glass-Steagall law for banks

The idea of restoring the law has also gained some support from Wall Street veterans such as Sanford “Sandy” Weill, whose creation of Citigroup Inc. ushered in the era of U.S. bank conglomerates in the 1990s. Weill has said ending Glass- Steagall’s prohibitions was a mistake.

“What we should probably do is go and split up investment banking from banking,” Weill said in July 25, 2012, CNBC interview. “Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.”

Weill helped engineer the 1998 merger of Travelers Group Inc. and Citicorp, a deal that led Congress to repeal the law. The New York-based company became the biggest lender in the world before taking a $45 billion taxpayer bailout in 2008 to avoid collapse.

More Complicated

Richard Parsons, who in 2012 ended a 16-year tenure on Citigroup’s board, said in April that the repeal of Glass- Steagall made the business more complicated and contributed to the financial crisis. Former Citicorp Chief Executive Officer John Reed apologized in 2009 for his role in building Citigroup and said banks that big should be divided into separate parts.

Some U.S. regulators back the idea of splitting up banks or limiting their size. Thomas Hoenig, the FDIC’s vice chairman, has said FDIC-backed banks should only offer “core services.” Daniel Tarullo, the Federal Reserve governor in charge of bank supervision, has urged caution on the question of breakups, but has also said rules could link caps on bank size to the size of the U.S. economy.

Other lawmakers have introduced legislation designed to limit bank size without restoring Glass-Steagall. For instance, Brown, an Ohio Democrat, and David Vitter, a Louisiana Republican, have offered a bill that would impose a 15 percent capital requirement on the largest banks.